Planning to apply for a home loan? It is vital to choose the loan tenure. Loan tenure decides your monthly installment and the repayment scheme. Based on loan tenure, you can actually end up having a clean track record or default. There are a couple of factors that decide the loan tenure. It is important to compare the top 3 factors to choose the tenure of a home loan.
Interest rate
When you decide on a housing loan, you need to choose the right tenure based on various factors. One of the most important factors is the rate of interest. The rate of interest is paid every month along with the principal amount of the loan. It is vital to choose the right rate of interest that is affordable and then choose the tenure based on it. A long-term loan always has a low rate of interest every month. However, if you choose a short-term housing loan, the rate of interest will eventually be high. Therefore, based on the rate of interest that you are willing to pay, you need to choose the right loan tenure so that paying it does not become a burden. The rate of interest is very important because it decides your repayment capacity and financial burden too.
Principal loan amount
The principal loan amount offered by home loan providers is a vital factor based on which the loan tenure should be decided. The loan tenure depends upon the loan amount that you take. If you take a high loan amount, it will become a burden if you choose a short-term tenure on your housing loan because the loan EMI amount will be high. Similarly, if you have taken a low-value loan, the burden will be low. For low value, you can always go for a short-term loan. It will be easy for you to repay. For high principal values, let's say your bank has approved 90% of the loan, you need to take a long tenure so that it is easy to repay the loan. With the right tenure, your loan principal amount can be repaid within the loan tenure.
The income capacity of an individual
The tenure of a housing or home renovation loan should always be decided based on the repayment capacity of the individual. If an individual has a high income, then it becomes very easy to repay the amount. Therefore, any loan tenure can be chosen. Individuals with a high income always opt for a small term loan with a high monthly installment amount. However, on the other hand, an individual with a low income each month always finds it difficult to pay a high amount. Therefore, they will choose a long-term loan so that it is easy to repay the loan without facing any burden. Therefore, income is vital because it helps you choose the loan tenure.
Wrapping up
Apply for a home loan with Clix Capital to enjoy an easy and hassle-free borrowing experience. Home loan eligibility is high, but it is advantageous to buy a property. If you are able to meet the eligibility, you will get an affordable loan.
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